Project Summary Sclerostin is a potent inhibitor of bone formation and has been shown to be a valuable drug target for treating osteoporosis. Mechanistically, sclerostin functions by binding to LRP5/6 on the osteoblast lineage cells to antagonize canonical Wnt signaling, thus negatively regulates bone formation. Presumably, after sclerostin is secreted by osteocytes, they reach the target osteoblasts at the bone surfaces by diffusion. However, to date it remains unknown how secreted sclerostin is regulated on the cell surface and in the extracellular matrix. To address this significant gap in sclerostin biology, we focus our study on sclerostin–heparan sulfate (HS) interaction. HS, a universal glycosaminoglycan found at the cell surface and in the extracellular matrix, is known to bind sclerostin and might regulate the bioactivity and diffusion of sclerostin. Our central hypothesis is that HS can regulate the biological functions of sclerostin in bone formation. To test this hypothesis, our overall objective here is to elucidate how HS interacts with sclerostin and how HS–sclerostin interaction regulates bone formation. We plan to pursue the following two specific aims: Aim 1. Determine the biological significance of HS–sclerostin interactions in vitro. We postulate that HS helps concentrate sclerostin on the osteoblast cell surface and facilitates the binding of sclerostin to its receptor LRP5/6 by forming ternary complex. We also hypothesize that HS serves a storage depot of sclerostin on the cell surface of osteocytes after it is secreted, and protects it from proteolytic degradation. We will manipulate HS–sclerostin interactions biochemically at the surface of both osteoblasts and osteocytes to determine the mechanisms by which HS regulates the function of sclerostin in these cellular contexts. Aim 2. Determine the role of HS–sclerostin interaction in bone formation in vivo. Our working hypothesis is that dampening HS–sclerostin interactions impairs the inhibitory potency of sclerostin towards LRP5/6, which leads to enhanced bone formation. Using a novel sclerostin knock-in mouse strain, we will examine the consequence of altering HS–sclerostin interactions in bone formation in vivo. Our contribution will be significant because we will identify multiple molecular mechanisms by which HS regulates sclerostin and elucidate how such interactions regulate bone formation. Results from the proposed experiments will substantially advance our understanding of the cellular regulation of sclerostin on both osteoblasts and osteocytes by elucidating the role of HS in the system. Importantly, these results are expected to have positive translational impact because by identifying how HS regulates the bioavailability of sclerostin, we may be able to provide new perspective for manipulating sclerostin in bone diseases.